The News
- Industrial output growth faltered in August, dipping to a 3-month low.
Highlights of Index of industrial production
- Data released by the Central Statistics Office (CSO) showed the index of industrial production rose an annual 4.3% in August, slower than previous month’s 6.5% and 4.8% posted in the same month last year.
- The mining sector contracted 0.4% compared with a growth of 9.3% in August last year.
- The manufacturing sector rose 4.6% during the month, shade higher than the year-ago period growth of 3.8%.
- The capital goods sector, a barometer of industrial activity, rose 5% in August as against 7.3% in the same month last year.
- Separate data released by CSO showed retail inflation rose an annual 3.8%, marginally higher than previous month’s 3.7% growth.
- This is the second successive month when retail inflation has remained below the central bank’s inflation target.
- Consumer inflation for September surprised at 3.8%, 20 basis points below RBI’s medium-term target for the second straight month.
Reasons for dip in the growth output
- The industrial growth dipped, led by a combination of factors:
- It includes an unfavourable base effect and disruption related to flooding in parts of the country.
- It reflects the slowdown in growth of core sector and automobile production.
About Index of industrial products
- The Index of Industrial Production (IIP) is an index which shows the growth rates in different industry groups of the economy in a stipulated period of time.
- The IIP is a composite indicator that measures the changes in the volume of production of a basket of industrial products during a given period with respect to the volume of production in a chosen base period.
- The data refers to the General Index as well as for each industry group.
- The base year for the current series of IIP is 2011-12.
- IIP is a composite indicator that measures the growth rate of industry groups classified under:
- Broad sectors, namely, Mining, Manufacturing and Electricity.
- Use-based sectors, namely Basic Goods, Capital Goods and Intermediate Goods.
- The Eight Core Industries comprise nearly 40.27% of the weight of items included in the Index of Industrial Production (IIP).
- These are Electricity, steel, refinery products, crude oil, coal, cement, natural gas and fertilisers.
- The IIP index is computed and published by the Central Statistical Organisation (CSO) on a monthly basis.
